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June 11, 2013  Tue 10:03 AM CT

RAX: SEE CHART GET CHAIN FIND STRATEGIES
Rackspace has lost more than half its market value this year, but one trader apparently believes that the stock is due for a bounce.

More than 2,000 July 35 calls traded in a strong buying pattern this morning, led by a print of 1,430 that went for $2.20. This is clearly new activity, as the volume was well above the strike's open interest of just 261 contracts before the session began.

RAX is up 1.15 percent to $35.96 in morning trading, advancing along with other cloud-computing names despite the broader market downturn. The stock hit an all-time high of $81.36 in January but gapped down after two quarterly reports since then.

Today's long calls, which lock in the purchase price for the stock, will track the share price closely because they are in the money. They are looking for RAX to gain roughly 3.5 percent by mid-July but will rapidly lose value if the stock doesn't rise. (See our Education section)

Calls outnumber puts by 6 to 1 so far today.
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